Financial Resolutions For 2018

Dated: 12/28/2017

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With a new year comes new resolutions. Some are lofty goals we set hoping we'll dedicate ourselves to reaching them, but we don't harbor feelings of remorse if we don't accomplish them. Some of us shoot for the stars with hopes of landing on the moon. Others set much more attainable resolutions they commit themselves to Day 1. They have a plan and they stick to it. While it's great to dream, it's also important to have a feasible and attainable solution to obtaining your resolution.

Whether you're looking to buy your first house in 2018 or your third income property, or even if you're not looking to buy at all, these three resolutions provide you with a solid plan for your finances in 2018. Don't let it be another year of "what ifs." What if I saved more? What if I didn't make that large purchase and invested it instead? What if I had bought that property? We can all hypothesize about what we could have done or we can start planning for success now.

1. Start a budget. It sounds obvious and simple...and it is. Unfortunately, few of us actually commit ourselves to this. We say we will or claim we do, but at the end of the day, we all know we make changes to that budget the minute the opportunity presents itself. A budget is a plan for every dollar you earn. Start with your monthly after-tax income and list your monthly expenses. Determine how much of that income you have to put aside for expenses and how much you have left over.

2. Pay down debt. Again, obvious, but few of us actually do this. Why do banks offer credit cards? To get us to spend money we don't have, to wrack up debt, to pay the bank more money. By itemizing your expenses you can identify where there is debt owed and dedicate a portion of that income to paying down your debt each month. When it comes to paying down debt, there are two approaches: the avalanche approach and the snowball method. The avalanche approach prioritizes high-interest debt, whereas, the snowball method focuses on paying off all smaller debts first. Determine which method better suits you and commit to it every month.

3. Build an emergency fund. Having three to six month's income saved up can help you avoid turning to high interest credit cards in the event of a job loss or emergency. The first step to building this fund is finding ways to cut costs. Make more homemade meals, make your own coffee, use loyalty and rewards cards to save on gas, groceries, and other every day items. As you start to build these savings, put them somewhere where they can work for you offering better returns than a traditional savings account.

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Kurt Galitski DRE 01348644